does this make sense?

Discussion in 'Strategy Development' started by cashmoney69, Apr 12, 2006.

  1. This is a quote from "The master Swing trader", and I'm a little lost. I divided the quote up into 3 questions:

    " Swing traders succeede when they recognize changing conditions and stay one step ahead of the restless crowd.

    1. How does one stay <b>AHEAD</b> of the restless crowd?...what does that mean?..keeping up with the news?

    This simple task requires great disipline because they must constantly abandon winning strategies and trade fresh ones

    2. Why abandon a winning strategy period?

    as soon as the herd charges in their direction."

    3. The "herd" is the trend line we see on our charts... is he saying we need to trade against the trend?

    - Nathan
  2. 1) Swing Traders = major Trend catchers.

    They succeed when they stay one step ahead of the restless crowd.

    restless crowd = trading ranges, they are 70% of all market and thus they are restless.. always there.

    Recognize changing conditions = being able to recognize that the market isn't in a range anymore.

    2) Abandon a winning strategy = markets are in constant flux, and thus they change. You too must abandon a once winning strategy, even if it is still winning for an even better strategy that can win even bigger at this current environment.

    Requires great discipline = to develop new strategies, and stay on top of a changing market requires constant study.

    3) "Herd" really isn't the trendline. Most markets move not because a huge number of participants are on one side, but a small minority with huge positions are on one side. Thus, it is indeed trade against the herd.. but with trend.